@TechReport{iza:izadps:dp18671,
            	author={Choi, Dongkeun and Lee, Munseob},
            	title={Equipment, Structures, and the Limits of Investment-Specific Technological Change},
            	year={2026},
	month={May},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={18671},
            	url={https://www.iza.org/publications/dp18671},
	abstract={The falling relative price of equipment, long viewed as the signature of investment-specific technological change (ISTC), has a countervailing force: rising structures prices. We establish four facts: high-income countries' structures prices rise as equipment prices fall; each investment rate falls with its own price; equipment prices predict income growth more strongly than structures prices; and U.S. structures price rises are broad-based. KLEMS data attribute roughly half the post-1996 rise in construction prices, in the U.S. and abroad, to declining construction TFP. We build a two-capital endogenous growth model with structures in production and R&D. Calibrated to the U.S., structures impose a structural drag of 0.50 percentage points per year, partially offsetting a 1.32 percentage point equipment boost. A nested CES extension finds structures-unskilled substitutability alongside equipment-skilled complementarity. These margins shrink the drag by 20-30% and reveal a novel channel whose omission overstates the 1963-2019 U.S. skill premium rise by 30%.},
	keywords={equipment;structures;investment-specific technological change;endogenous growth},
            }